I had the privilege of an invitation to speak at an international real estate conference on the Gold Coast of Australia earlier this month. Scrolling the news channels to find reporting on New Zealand’s election night proved challenging, and we instead resorted to watching snippets on our mobile phone, streaming New Zealand news channels!
Regardless of your political persuasion, the 2023 election results have resoundingly called for change from the status quo.
As we await the final vote count, it’s evident that New Zealand will soon have a new government. If pre-election promises are kept, the following changes are on the horizon:
1. Restoration of interest deductibility on rental properties, allowing property owners to offset their interest expenses against rental income when calculating their taxes. For residential rental properties purchased before March 27, 2021, tax deductibility on interest expenses is being phased out, with the benefit no longer applying from April 1, 2025. However, for properties purchased on or after March 27, 2021, there’s no interest deductibility available, except for new builds.
2. A reduction in the Bright-Line test.
3. A proposal to allow foreign buyers to purchase real estate priced at $2 million or more.
4. An amendment to the Residential Tenancies Amendment Act to reinstate no-cause evictions.
In other news, Stats NZ revealed on Monday, October 16th, that inflation has dropped to 5.6%, a significant decrease from its peak of 7.3% in June 2022. This may signal the end of a sustained period of interest rate hikes.
In closing, we’ve noticed widespread reports that real estate agents are seeing a spike in interest from buyers and property investors. This aligns with our personal experience, and we look forward now to 2024 and working more closely with Goodwins’ landlord-clients to tailor their long-term investment goals and ensure their success.
Please feel free to reach out to us if you have any questions or concerns, or if you’d like to discuss your specific property portfolio. We are always here to assist you in any way we can.